VisionLink Blog

By Ken Gibson

August 25, 2015

So...What Does "Pay for Performance" Even Mean Anymore?


Words matter and sometimes their overuse dilutes their meaning and power. "Pay for performance" falls in this category. It has become a cliche, a catch phrase. Companies claim to believe in the concept but their pay practices don't evidence that conviction. Some assume that if they have a bonus plan, they are practicing "pay for performance."  Well, it's a start, but only that.

Instead of talking about how the phrase seems to be used these days, let's talk instead about what it should mean. 

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By Ken Gibson

August 12, 2015

Defining the Purpose of a Pay Plan


It is not unusual for our firm to get a phone call from a potential client that goes something like this: "I'm looking to set up a long-term incentive plan and maybe redo our bonus plan." The request is specific and narrow. In an attempt to "flesh out" what the business leader is hoping to achieve with these additions and changes in their pay plans, we'll often respond by saying: "That sounds like somethng we can help you with. Tell me, though, what are you hoping to achieve through the development and re-engineering of those programs." Too often, the response to that question is as vague and imprecise as the request is clear and exact. In other words, people making decisions about compensation often seem to know what they want but not why they want it. It's a problem.

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By Ken Gibson

August 04, 2015

The $70,000 Salary


By now you've likely heard of Dan Price, the founder and CEO of a Seattle-based credit-card-payment processing firm Gravity Payments, who announced earlier this year that he was raising the company's minimum salary to $70,000 a year.  That move was met with overwhelming enthusiasm by many both inside his firm and out. Perhaps you've also read that things aren't working out so well for Gravity or Mr. Price.  Two key people have left the firm--disenchanted by the idea that many employees got their salaries doubled while they experienced little if any increase. The CEO took his salary down to $70,000 as well (from a reported $1 million per year) and is now apparently struggling to make ends meet. Pundits and critics are all weighing in on the wisdom (or lack thereof) of the approach.  

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By Ken Gibson

July 31, 2015

3 Ways to Improve Your ROI on Pay


Return on investment. How often is that term spoken of in business?  It's what shareholders expect. It's what CEOs are paid to achieve. Yet, when it comes to compensation, return on pay is seldom referenced--and as a result, rewards programs are not typically held to account for their contribution to share value and growth as other corporate investments are. Well, we live in a business age where that lack of accountability isn't acceptable anymore. So, let's talk about how to improve things.

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By Ken Gibson

July 28, 2015

Phantom Stock: The Business Owner's Ideal Growth Partner


If you own a business, you are likely focused on growth. For that to occur, you need great talent which both shares your vision and has the capacity to help you achieve it. You need business partners, but not in a legal, formal sense; just in terms of commitment and stewardship.  To gain that, you seek a means of codifying your financial relationship in way that properly incentivizes your key producers to help build the future company. If they can do that at a high enough level, you're willing to share the value they help create. You assume that means you should start sharing stock.  Not so fast. 

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By Ken Gibson

July 27, 2015

How HR Can Add Value to the Business


An article in this month's Harvard Business Review begins like this:

"Recent complaints about the HR function have touched a nerve in a large, sympathetic audience, particularly in the United States. The most vocal critics say that HR managers focus too much on “administrivia” and lack vision and strategic insight." (Why We Love to Hate HR...and What HR Can Do About It, HBR, July/August edition, Peter Cappelli)

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By Ken Gibson

July 16, 2015

When to Hire a Compensation Consultant


I suppose it may seem odd for someone who works in a compensation design firm to muse about when you should engage a pay consultant to help you with your rewards planning. In reality, given the experience our firm has with those who were ready for a consultant when they hired us and those who weren't, I think we're experts on the topic. This guidance should be helpful to anyone who is struggling with compensation issues and considering whether to engage outside assistance.  

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By Ken Gibson

July 10, 2015

Pay Plan Operations Ensure Your Compensation Strategies Succeed


Too many good pay strategies fail because there is no cohesive operational plan holding them together. They are designed, announced and then revisited when someone in leadership asks the question, "Now why do we have this plan and what kind of results is it generating for us?" Often it's human resources that is asked to answer for a given rewards program, even though the plan might have been initiated by the CEO, CFO or owner of the company. Many times the problem isn't the plan itself (although some "tweeking" may be needed). It's just that there are no are no operational underpinnings to ensure the collection of rewards plans work as a unit and drive the outcomes they're intended to produce.

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By Ken Gibson

June 30, 2015

Defending Executive Compensation


In today's business and political environment, executive compensation is under scrutiny.  This is an issue that impacts primarily public companies, but even private organizations may find themselves defending their approach to upper tier compensation, especially that of the CEO.  If that happens to you, what will your response be?

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By Ken Gibson

June 23, 2015

What Kind of Annual Incentive Plan Do Most Private Companies Use?


The leaders of most organizations look for some means of validating their approach to the type of incentive plan they put in place--or whether to even have a value-sharing arrangement at all  For such chief executives and others with responsibility for variable pay plans, data is a useful tool.  It can, however, also be a dangerous one. The value of data is that it gives a picture of what the market is doing; how others are addressing key compensation issues with which most businesses grapple. The danger comes when organizations put too much weight on what the data indicates and then simply try to mirror what others are doing. 

Let's deal with each of these issues one at a time.

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By Ken Gibson

June 17, 2015

"What is World-Class Compensation...and How Do I Achieve It?"


Most leaders of growth-oriented companies have large ambition. They are not looking for incremental change. They are seeking breakthrough results.  If you sit in meetings with these CEOs, you won’t hear things like: “Well, let’s look closely at our competition and see if we can mirror what they are doing, but maybe just a little better.” The idea is laughable. Instead they communicate and demonstrate an insatiable curiosity about what’s possible and where they want to take the company in the future.

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By Ken Gibson

June 12, 2015

Annual Incentive Plans: The 3 Most Common Mistakes


Many, if not most, organizations have some kind of annual incentive plan. Unfortunately, a majority of them are not happy with it. Often, our phone rings when an organization can't take it anymore and wants help with its plan. When it does, we typically hear one or more of the following complaints:

  • "Our bonus plan has become an entitlement--people just expect it."
  • "Our incentive program isn't structured properly--we're paying out benefits when we aren't even profitable."
  • "Our plan is completely discretionary. I go into the closet at the end of the year and try to determine how much of our profit to share, who should get a payout and how much they should receive. There's got to be a better way."
  • "Our short-term incentive plan has become too complicated. We have too many metrics and people are confused."
  • "Our employees don't understand what they need to do to maximize the payout from their plan--and then they complain about how much they get."

There's more, but you get the picture. The issues these business leaders articulate are symptomatic of three common mistakes companies make with their annual incentive plans:

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By Ken Gibson

June 09, 2015

How to Ensure Your Incentive Plans "Work"


Much has been written about incentive plans in business and whether they really make a difference.  Critics argue that money is not a motivator and that you can't pay people to perform. Fair enough. I don't argue with either of those assumptions.  However, people who are working hard to create value for the business instinctively know there should be some means of sharing in the growth they help fuel.  They seek a sense of partnership with company owners and won't become full stewards of the their vision unless their role is codified financially. Similarly, shareholders want business partners, not just employees. They expect performance and productivity and feel incentive pay can be used as a strategic tool towards that end...if applied properly.

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By Ken Gibson

June 04, 2015

Incentives: Short-Term vs. Long-Term


Most business leaders don't object to paying incentives.  What they struggle with is what kind of results they should reward, who should receive them, how they (the incentives) will be "paid for" and what the right balance is between short and long-term value-sharing.  These are difficult issues and create a lot of pain for those trying to make effective decisions in this regard. 

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By Ken Gibson

May 21, 2015

3 Ways to Turn Deferred Compensation into an Incentive Plan


Last week I talked about why deferred compensation (DC) is still a viable plan for the right organizations. Some of those companies are interested in a plan that serves as more than a means for employees to defer income and save taxes.  They want it to have a performance component associated with it. So this week, I'll discuss how to turn a plan into a means of creating greater focus on the results the company wants its top performers to achieve.

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CLIENT SUCCESS STORIES

"VisionLink has helped us successfully navigate a number of complex issues regarding our rewards programs. It has dealt with all facets of these varied issues with a high degree of competence, integrity, and straight forward advice. VisionLink's experienced team has consistently delivered first class results in a timely, professional manner and has become a valued Storm partner."

Thomas K. Grzywacz
Storm Industries, Inc.

"VisionLink has helped us successfully engineer a long-term incentive plan that has empowered our company to reward and retain key talent while increasing shareholder value. The knowledge, patience and deep experience of its team members helped us navigate a road that was unfamiliar to us. Ultimately, VisionLink designed a plan that met the high standards of both stockholders and key management employees. We have further engaged VisionLink to address our business succession and transition planning needs."

Reggie Dupre'
Dupre Logistics

"Over the past several years, National Technical Systems has engaged VisionLink to provide insight and direction on a number of executive compensation issues, as well as a performance evaluation of our 401(k) plan. Under its direction, NTS completely revamped executive level rewards to align with our business growth objectives and the strategic plan of the company. VisionLink's insight and direction have been invaluable. NTS has achieved its growth objectives and our executives feel appropriately rewarded for their performance."

Bill McGinnis
National Technical Systems

"VisionLink arrived on the scene just in time for us. We needed a new framework for our short-term and long-term incentive plans. VisionLink's modeling and forecasting process broadened our horizons and expanded our view of how to use a good incentive system to build, retain and strengthen our senior management team. We remain impressed by their expertise, professionalism and great service."

James Keng
Jimway, Inc.

"Our firm has had a long-term incentive plan for over eight years but we never quite felt like it was firing on all cylinders. We hired VisionLink to re-energize our plan, and they did it! We now have a cohesive awards strategy that's fair to shareholders and valued by our employees. VisionLink's team is technically skilled and very creative. We're happy to recommend VisionLink to firms looking to upgrade their management incentive programs."

John M
FTO Inc.

"Our company was like VisionLink's typical clients. We were great at sales and haphazard at how we compensated our people. VisionLink's process brings great clarity and confidence to our growth planning - and makes compensation a great growth capability."

Dan Sullivan
Strategic Coach ©

"The team at VisionLink helped our company structure a long-term incentive plan that parallels the company's strategy for continued growth as a global market leader within our industry. Their approach resulted in a program that our corporate team and executives embraced on both a professional and personal basis. Through VisionLink's guidance and execution, we were able to create both a motivational tool for current team members and a recruiting device to attract future executive level associates. Well done!"

Mark Rhoades
Fluidmaster, Inc.

"As a leading direct seller of scrapbook photo albums and supplies, Creative Memories has independent consultants across the country. And for over six years now, VisionLink has helped us to stay connected and administer a voluntary 409A non-qualified plan for them. VisionLink has provided support for all aspects of our plan from notification of eligibility through registration and distribution. The VisionLink support team has offered suggestions for improving processes and provided us with outstanding service year after year."

Guy Walker
Creative Memories North America